Baht nears 31 per US$ as gold rally and Fed-cut bets push currency to 4-year high
Thin year-end liquidity and heavy gold-linked flows helped baht hit a fresh multi-year peak, with analysts flagging 31.00 per US$ as next key test, and warning of sharp two-way swings from position-squaring.
- The Thai baht strengthened to its highest level in over four years, trading at an intraday peak of 31.02 per US dollar.
- A primary driver for the currency's appreciation is a rally in gold prices, which have reached record highs.
- The baht's rise is also fueled by expectations that the US Federal Reserve will cut interest rates, leading to a weaker US dollar.
- Additional factors supporting the baht include seasonal fourth-quarter capital inflows and a current account surplus.
The baht strengthened further on Wednesday (December 24, 2025), breaking through the key 31.10 per US$ level in morning trade and hitting its strongest point in more than four years.
The move marked a fresh high since June 14, 2021 (31.06 per US$) and extended gains from the December 23 close of 31.12 per US$.
KResearch (Kasikorn Research Centre) said the baht continued to firm during the session, reaching an intraday peak of 31.02 per US$ by the close, its strongest level in 4 years and 9 months, or since March 2021.
Kanchana Chokpaisalsilp, a research executive at Kasikorn Research Centre, said the baht’s rise has been driven by three main factors that have persisted through December: record-high gold prices, expectations that the US Federal Reserve could cut rates more than once, weakening the dollar, and position unwinding that triggered additional dollar selling as the baht broke key technical levels, including 31.50, 31.40 and 31.30 per US$.
She added that seasonal fourth-quarter support, including capital inflows and a current account surplus, has also helped, while thin year-end liquidity has amplified moves in the currency market.
If these drivers persist, she said the baht has a strong chance of strengthening through 31.00 per US$, with the next levels to watch at 30.90 and 30.60.
However, she warned of potential sharp swings from year-end “square positioning” as market players avoid carrying positions into the new year, increasing volatility and raising the risk of central bank intervention.
Poon Panichpibool, a market strategist at Krungthai Global Markets, said the baht could break below 31 per US$ before year-end if there is a heavy wave of dollar selling or if gold prices continue to climb.
He noted the baht’s strength has moved against domestic fundamentals, reflecting external drivers such as a weaker dollar and the baht’s correlation with gold.
He added the currency may also benefit from the tourism high season into Q1 2026 and could see renewed buying of Thai assets ahead of the February 2026 election, citing a historical tendency for the baht to strengthen in the month after an election.
At Bank of Ayudhya (Krungsri), Rung Sanguanruang, a senior director in global markets planning, said the key driver into year-end remains global gold prices, with other market activity thinning.
She said any break below 31 per US$ would likely be temporary and should be monitored after the New Year.
She forecast the baht in 2026 at 30.80–33.00 per US$, supported by possible Fed rate cuts and Thailand’s current account surplus, while risks include Thailand’s low-growth outlook and the possibility of a gold pullback if US labour data beats expectations.
Domestic gold prices were volatile on December 24, rising THB300 at the open before swinging sharply.
By 3.51pm, prices were down THB50, with gold bars at THB65,900 and jewellery gold at THB66,700, compared with THB65,950 and THB66,750 on December 23.
Kritcharat Hiranyasiri, chairman of MTS Gold (Mae Thong Suk), told Krungthep Turakij he sees a chance Thai gold prices could climb above THB70,000 in 2026, particularly if global spot gold posts new highs and the baht strengthens.
He cited rising US debt, falling interest rates, weakening confidence in the dollar, continued central bank gold buying, including in Europe, and an unresolved US trade war, while noting a stronger baht can limit gains in domestic gold prices.
In broader markets, Reuters reported the US dollar is on track for its worst annual performance in 22 years, with investors pricing in about two Fed rate cuts in 2026.
The dollar index slipped to a two-and-a-half-month low of 97.767 on December 24 and was headed for an annual decline of around 9.9% in 2025, the steepest since 2003.
The report cited David Mericle, Goldman Sachs’ chief US economist, as saying the Federal Open Market Committee (FOMC) is expected to cut rates by 25 basis points next year to 3.00–3.25%.
By contrast, the euro rose to a three-month high of 1.1806 per US$, up more than 14% for the year and on course for its best annual performance in 22 years, after the European Central Bank held rates and upgraded parts of its growth and inflation outlook.
The Australian dollar also strengthened to 67.13 US cents, its highest since October 2024, on expectations the Reserve Bank of Australia could raise rates early next year.
